Deriving the IS Curve Panel (a) shows the investment function: an increase in the interest rate from r₁ to r₂ reduces planned investment from I(r₁) to I(r₂). Panel (b) shows the Keynesian cross: a decrease in planned investment from I(r₁) to I(r₂) shifts the planned-expenditure function downward and thereby reduces income from Y₁ to Y₂. Panel (c) shows the IS curve summarizing this relationship between the interest rate and income: the higher the interest rate, the lower the level of income.